The manufacturing buyout firm Melrose said it would consider making a higher proposed offer for Charter International if it were given access to the British engineering company's books. Melrose also said it would not be appropriate to proceed with an offer without being allowed to undertake due diligence.
"Melrose is willing to consider increasing its proposal to reflect any information which demonstrates that it has materially undervalued Charter and justifies such an increase," it said.
The company's latest proposed bid, made earlier this month and pitched at 840p per share, is 8 per cent higher than its previous indicative approach. That offer, however, is still at the level Charter shares were trading at in May, before falling sales and management issues pummelled the stock.
Charter rejected the offer, which valued it at about £1.4bn, and said the increased bid still undervalued the company. It also named a new chief executive and said it would look at all alternatives.
Analysts say Charter could be worth more than 900p per share, and the company is believed to be trying to find a white knight, including US-based rival Lincoln Electric.
"We estimate a maximum price of 950p per share if an offer from a third party is received and Charter becomes the subject of a bidding war," Jo Reedman, an analyst at Singer Capital Markets, said.
A top-10 shareholder in Charter said yesterday that Charter should allow Melrose access to satisfactory due diligence after Melrose's statement.
Melrose shares rose 2p to 370p, while shares in Charter were up 1.4 per cent at 797p, valuing the business at just over £1.3bn. Melrose's share price is up 15 per cent this year. Before offer talks were made public Charter's shares fell 27 per cent in two months.Reuse content